Japan beef imports may hit 17-year high

Cows graze in a farm near Victoria, Argentina. Photo taken on June 16, 2017. -- REUTERS

JAPAN’S beef purchases are set to climb this year as growing demand for affordable meat counters the first rise in import duties in 14 years.

Japan’s beef imports are likely to increase to the highest level since 2001 after growing more than 10% last year, Shiro Ohashi, executive director of the Japan Meat Traders Association, said in an interview in Tokyo on Thursday. Foreign beef is sought as a cheaper alternative to Japanese meat and fish, he said.

Beef consumption rose 6.8% in the seven months to Oct. 31, heading for the fastest annual expansion in at least 12 years, according to the latest data from the Agriculture Ministry. Japanese producers are unable to keep up with demand as elderly farmers are retiring without successors and as the domestic herd shrinks.

Premium Wagyu beef is becoming too expensive to buy for many Japanese as demand from overseas buyers is expanding, buoying prices, Ohashi said. Less fatty beef from Australia and the US is becoming popular, especially among senior consumers, Ohashi said.

US beef imports are expanding at a faster pace than Australian shipments, even as Japan increased tariffs on US frozen beef in August, because US prices remain competitive, Ohashi said. In the 11 months through November, imports of US beef climbed 26.6% from a year earlier and purchases from Australia rose 5.5%, according to the Agriculture Ministry. The US accounts for 42% of total imports.

Noodle-shop operator Kourakuen Holdings Corp. decided last year to turn some of its restaurants to steak houses through a franchise agreement with Pepper Food Service Co. Ltd., the operator of popular “Ikinari Steak” shops. Bronco Billy Co. Ltd. expects a 20% increase in operating profits this year as the company expands its steak restaurants.

“Regardless of the tariff increase, yen-based prices of US beef have stayed low thanks to a weakening dollar,” he said. Low feed-grain prices in Chicago and an expanding American herd have also kept US beef affordable, he said.

Imports are likely to expand in the medium term after Japan’s trade agreements with 10 Pacific nations and the European Union.

“Ireland is eager to boost beef shipments to Japan, taking advantage of the trade agreement, as the nation expects to lose sales in the UK because of Britain’s withdrawal from the EU,” Ohashi said. Shipments from Canada and Mexico will probably increase after the Trans-Pacific Partnership agreement is implemented. — Bloomberg